United Kingdom

Siemens heightens doubts over UK jobs boom

UNITED KINGDOM: The first major contract for next-generation wind turbines signed by Dong Energy and Siemens in July looks more likely to create Danish jobs rather than aid the UK's long-awaited offshore wind employment boom -- despite relating exclusively to projects off the British coast.

The €2.9 billion deal for Siemens to supply Danish state utility Dong with 300 of its 6MW turbines for UK projects between 2014-17 will definitely create Danish jobs, a Siemens spokesman told Windpower Monthly but he was unable to give similar guarantees for its UK workforce.

Siemens was investing in the expansion of its Aalborg facility in northern Denmark to accommodate the manufacture of the 75-metre blades for its new 6MW turbine, the spokesman confirmed, while UK manufacturing jobs relating to the 6MW turbine are largely dependent on Siemens’ plans for a turbine assembly plant in Hull being progressed.

"It is true that large orders like the framework agreement with Dong Energy for the delivery of 300 offshore wind turbines help to create new Danish jobs," said the spokesman.

"A portion of the turbines will be [assembled] in Denmark and the rest in Hull. The exact breakdown is yet to be determined," he added. The rotor blades will be manufactured in Aalborg. Yet, how many jobs might be created in Aalborg because of the framework order cannot be estimated at this stage."

The investment in Aalborg’s expansion was first announced last year as part of a €150-million package that also includes two new research-and-development centres.

Uncertainty

However, Siemens’ investment in a turbine-assembly plant at Hull is still far from certain. The UK’s Department for Communities and Local Government (DCLG) gave its consent in July to the proposed Green Port Hull project, a £210 million (€268 million) facility in which Siemens will invest £80 million to build an assembly plant, and Associated British Ports (ABP) contributing £130 million to the overall development of the site.

The firms hope to have the facility operational by 2014, in time for delivery of turbines for the Dong framework. However, following DCLG’s approval, the development will now be subject to a statutory period of judicial review. Siemens and ABP have also yet to agree commercial terms on the facility, the Siemens spokesman confirmed.

A Dong Energy spokesman would only comment on jobs created by its deal with Siemens by saying that the firm typically uses "local skills on all parts of our projects".

Such a lack of concrete details on the number of UK jobs created by the country’s largest offshore wind turbine deal so far is potentially highly embarrassing for the British government, which has been pushing offshore wind as a source of domestic jobs growth.

Optimism backfires

Speaking recently at RenewableUK’s Global Offshore Wind conference in London, energy and climate change minister Ed Davey said: "The Centre for Economics and Business Research published a study which suggested that ambitious deployment of offshore wind could increase UK GDP by 0.2% in just three years, creating over 45,000 full time jobs.

By 2020, it could employ 97,000. "When we as a nation and a government are so focused on growth, numbers like this should be grabbing headlines."

However, what was instead grabbing the headlines when Davey spoke at the conference in June was the fact that Danish manufacturer Vestas had cancelled plans to build a blade and nacelle factory at Sheerness in Kent to support production of its V164-7.0MW offshore turbine.

Vestas’ decision followed Korean firm Doosan Power Systems’ announcement in April that it was axing plans for a £170 million facility in Scotland to build its 6MW Doosan 3000 turbine, citing uncertainty in the European economy as the main reason.

Muddied regulations

GE, meanwhile, has put on hold its plans for a €110 million UK manufacturing facility for its 4.1MW offshore turbine. The company blamed a lack of clarity in regulation in the UK, which created a difficult investment environment, for its decision to delay the plant indefinitely.

Some of this uncertainty was partially resolved in August when, following a lengthy review period, the future payment levels for offshore through the renewable obligation certificate (ROC) subsidy programme were finally confirmed at their current level of 2 ROCs/MWh for the time being, before dropping to 1.9 ROCs in 2015/16 and 1.8 ROCs in 2016/17.

However, the more long-term issues created by the UK’s electricity market reform process — such as the replacement of ROCs by a feed-in tariff — remain unresolved, with further details on progress not expected until later this year.

Trade body RenewableUK remains largely upbeat about the jobs prospects for offshore wind, citing manufacturer Areva’s plans to build a factory in the UK and jobs created by members of the supply chain, such as engineering firm OGN Group, which is investing in new facilities for jacket manufacturing with 600 jobs in Newcastle; and JDR cables, which created 130 new jobs in Hartlepool supplying inter-array cables.

However, Areva’s investment plans are subject to market certainty, and Gordon Edge, director of policy at RenewableUK, said that firms looking at the long-term investment in facilities for Round Three offshore projects — development of which will extend well into the next decade — need these long-term issues to be resolved as soon as possible.

"We are very keen that uncertainty is resolved so companies such as Siemens can invest in facilities like Hull," said Edge.

"A key message in our lobbying has been that these turbines don’t have to be built in the UK — the likes of Siemens have facilities across Europe and can build elsewhere. There needs to be certainty about UK government support for offshore wind for them to invest in UK jobs."

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